Study: Medicaid Health Home reduces costs and reliance on emergency care

Published on July 20, 2016

Participants in an Iowa Medicaid program designed to provide better coordinated care to patients with multiple chronic illnesses have reduced health care costs and fewer emergency department visits, according to a new University of Iowa study.

A portrait of Dan Shane of the University of Iowa College of Public Health.
Dan Shane

The research, conducted by Dan Shane, assistant professor of health management and policy in the UI College of Public Health, in collaboration with researchers at the UI Public Policy Center, examined more than 5,800 Iowa Medicaid members enrolled in the state’s Medicaid Health Home (MHH).

The program, launched in July 2012, provides enhanced care coordination and services for Medicaid members with multiple chronic conditions. The MHH provides extra payments to health care providers for the enhanced care, in part due to federal funding from the Patient Protection and Affordable Care Act.

According to the study, which reviewed three years of health claims data between January 2011 and December 2013, participation in the Iowa MHH reduced spending by approximately $132 per member per month, or nearly $1,600 annually. This represents a 15% cost savings for MHH members compared with traditional Iowa Medicaid members.

The researchers also found increased cost savings the longer a member was in the MHH program: each additional month of enrollment resulted in $10.70 less in total monthly costs. In addition, members were less likely to visit the emergency department compared with traditional Medicaid recipients and emergency department spending was lower for MHH members.

“All of the evidence we evaluated, including surveys of members and input from providers, pointed to the benefits of improved care coordination in terms of reduced emergency department usage and lower overall costs,” says Shane.

Beyond cost savings, surveys of MHH members and providers indicated improved satisfaction with the health care services. Compared with the period before enrollment in the MHH, members reported increased access to care and enhanced communication with providers. Members also indicated that unmet need declined in service areas such as after-hours help, urgent care, and prescriptions.

“We could be seeing the best case in terms of positive impact among the early members and providers,” cautions Shane. “Whether additional members and providers show similar results is something we’ll be watching for.”

The study appears in the August 2016 issue of the journal Medical Care and is available online.

Other researchers on the UI study team include Phuong Nguyen-Hoang from the UI School of Urban and Regional Planning and the UI Public Policy Center; Suzanne Bentler and Elizabeth Momany of the UI Public Policy Center; and Peter Damiano, Director, UI Public Policy Center and the UI Department of Preventive and Community Dentistry.